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EU Enlargement and the Portuguese Economy

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  • Frank Barr
  • Maria Paula Fontoura
  • Nuno Crespo

Abstract

The main focus of the present paper is on the emerging and likely future trade effects of enlargement. Though our particular concern is with Portugal, we set the scene by comparing the trade structures of the 10 countries of Central and Eastern Europe (i.e. the eight CEE accession states plus Bulgaria and Romania) – including an analysis of the individual cases of the Czech Republic, Hungary and Poland – with those of the EU15 as a whole, and with those of the 4 EU cohesion countries. The elimination of trade barriers between incumbents and accession states will have two trade‐related effects on EU incumbents: an increase in bilateral flows with the CEEC and a shift effect as the CEEC displace some incumbent exports to EU markets. The first effect is likely to be strongest for those incumbents for which there is a strong overlap between their export structure and the import structure of the CEEC. Portugal emerges as one of the economies with the least overlap. The displacement effect, we conclude, is likely to be particularly strong in the case of Portugal, given the high degree of similarity between Portuguese exports and those of the CEEC. Portugal appears to be ‘being squeezed from below’ in that, for the majority of its traditional export sectors, the CEEC became progressively more competitive during the second half of the 1990's. Portuguese specialisation was increasingly confined to low‐technology, low‐added‐value sectors with declining demand, as strong FDI inflows to the CEEC led to an increasing preponderance of more dynamic sectors in their export structures. Thus, Portugal is also being squeezed from above. This suggests that there may be substantial industrial disruption, in response to which labour‐market flexibility and dynamic entrepreneurial response is crucial. Intersectoral mobility is generally easier the more highly educated the workforce – an indicator on which Portugal scores poorly. The Portuguese labour market, however, displays a high degree
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  • Frank Barr & Maria Paula Fontoura & Nuno Crespo, 2003. "EU Enlargement and the Portuguese Economy," Working Papers Department of Economics 2003/06, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    • Handle: RePEc:ise:isegwp:wp62003
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    References listed on IDEAS

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    Cited by:

    1. Vera Pirimova, 2021. "Structural Convergence of Bulgarian Foreign Trade and Exports to the Euro Area," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 93-117.
    2. Seda Ekmen Ozcelik, 2018. "The Potential Effects of TPP, TTIP and Trump's Tariffs on China's Competitiveness in the US Market," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 4(2), pages 95-115, December.
    3. Franck Barry, 2013. "The Knowledge Economy, Economic Transformations and ICT: Regional Dynamics in the Deployment Phase. Case study: Southern and Eastern Ireland," JRC Research Reports JRC83549, Joint Research Centre (Seville site).
    4. Sandrine Levasseur, 2006. "Convergence and FDI in an enlarged EU : what can we learn from the experience of cohesion countries for the CEECS ?," SciencePo Working papers Main hal-00972693, HAL.
    5. repec:spo:wpecon:info:hdl:2441/3382 is not listed on IDEAS
    6. Schukkink, Martijn & Niemann, Arne, 2012. "Portugal and the EU’s Eastern Enlargement: A logic of identity endorsement," European Integration online Papers (EIoP), European Community Studies Association Austria (ECSA-A), vol. 16, July.
    7. Maria Paula Fontoura & Nuno Crespo, 2004. "Integration of CEECs into EU Markets: Structural Change and Convergence," Working Papers Department of Economics 2004/15, ISEG - Lisbon School of Economics and Management, Department of Economics, Universidade de Lisboa.
    8. repec:hal:wpspec:info:hdl:2441/3382 is not listed on IDEAS
    9. repec:hal:spmain:info:hdl:2441/3382 is not listed on IDEAS
    10. Carlos Vieira & Aurora Galego & Isabel Vieira, 2005. "Is FDI Taking the Orient Express?," Economics Working Papers 16_2005, University of Évora, Department of Economics (Portugal).
    11. Barry, Frank, 2004. "Export-platform foreign direct investment: the Irish experience," EIB Papers 6/2004, European Investment Bank, Economics Department.

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